FINANCIAL SERVICES - The Record · and recommend next best actions. An innovative next best action execution capability, developed by Avanade, enables next best actions to be integrated

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In today’s financial services industry, digital transformation holds countless possibilities. New technologies are emerging at an exponential rate, and those pioneering banks and insurers that are embracing them are undoubtedly reaping the rewards. In this issue, we take an in-depth look at how such technology solutions are driving digital transformation. We explore how blockchain is driving the collaborative economy; how banks are accelerating their move to the cloud; and how new solutions are optimising customer and distributor experiences in insurance. Plus, don’t miss the exclusive interview with Efma’s Vincent Bastid, who explains how collaboration across financial services is fundamental for all players operating in retail banking today.

K A R E N C O N E : M I C R O S O F T

F I N A N C I A L S E R V I C E S

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F E AT U R E

What do customers expect when they interact with insurance companies today? “The short answer is consistent

and personalised experiences across all the chan-nels they interact with,” says Dennis Vanderlip, industry solutions director of Worldwide Insurance at Microsoft.

Indeed, this is a vision that many insurance companies are working towards today. But, if you consider the fact that they have to contend with overlapping, siloed IT systems, most of which have been created internally and do not interact with each other, then getting that single view of the customer is easier said than done.

According to Vanderlip, the solution involves taking a more comprehensive look at how cus-tomers interact with your organisation from the

point of acquisition through to the processing of a claim. In many cases, this involves rethink-ing what IT you have in place, and looking at what you can do to break down the typical product-based systems and siloes.

Solutions like CRM for Insurance from Microsoft are designed to do just that. “We are bringing together disparate systems and siloes to present the customer view rather than the prod-uct view,” says Vanderlip.

The customer relationship management (CRM) solution serves as a customer engagement plat-form or hub, bringing together customer inter-actions across channels with data from core insurance systems, insight from analytics and machine learning, social channel interactions, marketing initiatives, and third-party external

By using the latest customer relationship management solutions, insurers can put the customer at the heart of their business and reap significant rewards. Dennis Vanderlip is joined by a number of key Microsoft partners to tell us more

B Y R E B E C C A L A M B E R T

Proactive CRM

Addressing the back office

Heloise Rossouw says that, no matter how great an insurer’s front-end proposition is, success can’t be had if the back office isn’t right

I N S I G H T

Over the years, insurers have typically accumulated an assortment of legacy systems that play a significant role in their businesses’ operations. The resulting assortment of old and new technologies, and internal and external data, makes it very hard to achieve the levels of IT connectivity that provide the foundation for unlocking the potential of data and technology.

Fortunately, software is now available to act as an interface umbrella for the compendium of systems and technology, helping insurers to integrate their data and provide a seamless integrated customer interface across all communication channels.

There are all sorts of legitimate reasons why higher levels of customer centricity have been rather slow to take off in the insurance sector, such as the innate complexity of the insurance contract and onerous regulation. But until insurers fully address the backoffice implications and the delivery of real-time analytics, the benefits of more customer-focused business models are likely to fall short of expectations, no matter how great the front-end proposition looks.

Heloise Rossouw is a senior consultant in the Insurance Management Consultancy at Willis Towers Watson

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data sources to create an information file that provides a complete view of each client.

Microsoft partners including Accenture, Avanade, Hitachi Solutions and Realdolmen have then built insurance-specific solutions on top of Microsoft Dynamics 365 to provide the specific functionality required.

Hitachi Solutions, for example, has developed Hitachi CRM for Insurance. “A CRM system is more than a claims system, more than a sales system and more than just a customer service system,” says Tap Haley, the company’s industry vice president of Insurance and Health Plans. “It is an aggregator of all things customer-related and should be the one-stop-shop for anyone who is handling a customer enquiry from the point of sale through the processing of a claim.”

Meanwhile, the Travi@ta CRM for Insurance solution from Realdolmen offers a full view of end customers and intermediaries to help determine the next best action. “The solution gives a good total picture of the customer with clever function-ality like the timeline to indicate what to do next

to get the best out of each relationship,” says Olaf Hoppenbrouwers, product manager at Realdolmen.

In addition to customer-focused CRM work-loads, the CRM solution also lends itself to help-ing manage a carrier’s agent distribution channel.

“Carriers with independent brokers and agents not only have to distribute centrally generated leads out to the agent network, manage the chan-nel and identify best practices amongst them, but they are also trying to increase their loyalty to do business with them,” says Vanderlip.

By implementing a distributor relationship management solution based on Dynamics 365, carriers have access to functionality such as compliance, pipeline and sales management, agent and agency performance management (such as premiums by month, loss ratios and hit ratios), agent licensing and certification management. With all of this at their disposal, they can better manage their agent/broker dis-tribution channel, monitor performance more closely and make it as easy and profitable for agents to do business with them.


F E AT U R E

Why are insurers lagging in customer experience?Steve Magennis says that few carriers are ahead of the customer experience game. Analytics is key

I N S I G H T

Our research indicates that while the vast majority of insurers acknowledge that customer experience can substantially impact lifetime value, retention and growth, very few carriers believe they are ahead of their customers’ expectations. We see this is a multifaceted problem that starts with developing the right strategy, overcoming resistance to internal change and finally leveraging the right tools in an iterative and cost-effective manner.

We’ve always felt that Dynamics CRM, now Dynamics 365, is perfectly positioned as a hub for the modern digital insurance business model. It allows our clients to orchestrate all their data and surface insights and actions derived from disparate systems when, where and how they are needed to support digital initiatives.

The ACAI (Accenture Customer Analytic Insights) solution is developed on Microsoft Dynamics 365 and brings together innovative analytics capabilities and technologies into a single integrated solution

to help financial services firms offer proactive next best actions across any channel. Accenture’s Customer Analytics Record (CAR), created from decades of financial services experience, provides a complete omni-channel view of customer activity in a format optimised for real-time decision-making. ACAI then uses Microsoft Azure Machine Learning to analyse customer activity and execute robust analytical models that predict customer behaviour and recommend next best actions. An innovative next best action execution capability, developed by Avanade, enables next best actions to be integrated with any interaction channel and system, including customer service channels using Microsoft Dynamics and digital channels. The result is a solution that enables real-time decision-making and recommendations, and actions to be presented and applied across any customer interaction channel.

Steve Magennis is a global industry lead at Avanade

Finding the information breadcrumbs

Jeff Wargin says that competitive advantage can be achieved through better customer insight

I N S I G H T

Whether it’s your agency, claims handlers, or billing and accounting personnel, every frontline representative or channel can be more effective with a complete view of customer – the facts and the relational data.

Core systems, like the Duck Creek suite of software, provide the rich data necessary to provide that 360-degree view of a customer. And we also collect the rich data about the relationships between those pieces, like what claims are associated with what policies, or what and when policies were purchased by what customers, and whether a claimant is a customer. And we’ve made it easy to get at those information ‘breadcrumbs’ and exploit them.

We have worked with a third-party integrator to build a packaged integration to Microsoft’s Dynamics

365 so that it connects to Duck Creek’s solutions quickly and easily. By combining insurance core systems with CRM, insurers can see where a customer is in their insurance journey. That they’ve had auto policies with your company for 10 years; that they had renters insurance, and now homeowners, and that they are 35-years old and recently married. Based on those information breadcrumbs, agents can review what policies they have and what other coverages they may want or need to consider. You will land more business that way. Not only are you more responsive, but you are anticipating their needs.

Jeff Wargin is global policy admin and data product lead at Duck Creek Technologies

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The way banks collect and use information about their customers is changing. We’ve come a long way since the days of gathering

rudimentary contact information or even the cus-tomer relationship management (CRM) systems of the late ‘90s, which focused solely on managing the customer relationship and storing as much information about each customer as possible.

Today, it’s more about the quality rather than the quantity of information. Banks are now focusing on how they can turn their data into useful information so that they can really under-stand their customers at an individual level and

use their insights to predict what their customers will want in the future. They’re moving towards a system of intelligence.

In many cases, we’re seeing more and more banks focus on merging CRM with advanced analytics technologies. VeriPark Next Best Action, built on the Microsoft Cloud, is a great example. It analyses data collected from CRM (such as Microsoft Dynamics 365) and other banking sys-tems, including e-mail, mobile apps, service cen-tre calls, in-branch conversations, ATM use and so on. Using the built-in analytics capabilities of Cortana Intelligence Suite and the high compute

workload of Azure Machine Learning, banks can sort through mounds of CRM data to identify patterns and trends, and determine the optimal next action to take with an individual customer.

Using this type of tool, banks can do more to boost customer loyalty and improve client retention. For instance, they could identify the top five attributes of a customer that is likely to leave the bank, such as going into retirement, moving house or changing job – pinpoint these triggers and then be alerted when they happen so that they can act fast.

Leading banks are already doing an amaz-ing job of using CRM and analytics technolo-gies to deliver a superior customer experience. Metrobank – the first new UK high street bank to open in 150 years – is using Microsoft Business Solutions to offer more relevant products and ser-vices and to track social sentiment. Wells Fargo, meanwhile, is breaking down divisions across its organisation so that it can gain one unified view of the customer. And from an SMB service stand-point, RBS is doing a great job of using technology to offer its clients value add advisory services.

Looking further to the future, it will be interesting to see how banks harness artificial intelligence and combine it with their existing channels and mecha-nisms to add another layer to the customer experi-ence. It’s an exciting time to be in the industry, as we move from managing information, to understand-ing it, to gaining insight from it and, ultimately, using it to understand where we will be tomorrow.

Chad Hamblin is global industry director, Financial Services, Microsoft

Intelligent interactions

Banks are exploring the benefits of combined CRM analytics solutions so they can understand individual customers’ current and future needs, and act on them

C H A D H A M B L I N : M I C R O S O F T

V I E W P O I N T

“We’re seeing more and more banks focus on merging CRM

with advanced analytics”



I N T E R V I E W

B Y R E B E C C A L A M B E R T

Microsoft and Bank of America Merrill Lynch’s blockchain project is taking the complexity, cost and error out of labour-intensive trade finance processes. We find out more about the work they’re doing together

It was during Sibos, the recent financial services event, that Microsoft and Bank of America Merrill Lynch (BAML) went public about the

work they’re doing around blockchain.The two are building and testing blockchain-pow-

ered financial exchanges on Microsoft Azure – Microsoft serving as the technology provider and test client, through Microsoft Treasury, and BAML providing the necessary trade matter subject expertise. Their aim is to develop applications that optimise trade finance processes, which tend to be highly manual, time consuming and costly.

“Blockchain can transform our business,” says Chris Bozek, who leads the Global Trade and Supply Chain product team at BAML. “Specific to trade, there is significant potential because it is inherently a document heavy business. It relies on bilateral exchanges of documents that need to be reviewed, agreed upon and then complied with to satisfy the financial side of the transaction. It’s an exciting time as we learn how to take advantage of technology to not only accelerate transactions, but reduce risk and cost, and improve transparency for all parties.”

Marley Gray is a leader on the Microsoft Azure Engineering team, which has been tasked to help identify where and how Microsoft Treasury can use this distributed ledger technology to improve its operations. “Microsoft Treasury is a perfect use case for blockchain,” says the principal pro-gram manager. “The unit manages over US$150 billion in assets and, as our company has moved from a products to a services selling strategy, its processes have become far more complex.”

To start with, Microsoft and BAML have been focusing on standby letters of credit – documents

issued by a bank, providing payment assurance on behalf of a client should the counterparty not per-form as intended.

“The application process has traditionally been a long, painful one,” says Gray. “It was manual, took too long and also had a very high error rate, because of the number of steps and parties involved.”

“The challenge was to understand how blockchain can reduce cycle time and also provide Microsoft with a better risk view – not only from a portfolio but from a client perspective,” explains Bozek.

At Sibos, the two parties demonstrated their proof of concept and shared the results. “Our paper-based process took five days,” says Gray. “With blockchain, the cycle time was reduced by more than half, regardless of how many parties were involved. And the error rate went down from 50% to zero.”

Microsoft and BAML are now refining the tech-nology and exploring how they can apply block-chain to other trade financing products. “We can now tackle additional transaction types using our standby letters of credit solution as a basis,” says Bozek. “It’s a great solid foundational product for us to build upon.”

Over time, they also expect to add new features from Project Bletchley – Microsoft’s open, mod-ular blockchain fabric powered by Azure – and bring more parties into the mix.

“It’s been a very good learning process to see first-hand how a treasurer is evaluating the ben-efits of blockchain specific to trade transacting,” says Bozek. “As we work through the adoption challenges of this new technology, we’re gaining some valuable insights into blockchain as a service and transacting in the cloud.”

From paper to blockchain

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F I N A N C I A L S E R V I C E S V I E W P O I N T

“Blockchain enabled solutions will transform the future of the financial

services industry as we know it”

Blockchain technology started life as a pro-tocol that recorded bitcoin transactions between two individuals (mostly unknown

to each other). It was developed in a way that would allow bitcoin provenance to be validated, would avoid double spending and in which an immutable ledger would be constructed and maintained by multiple non-trusted parties, without a central authority governing it.

Today blockchain technology has evolved to become a protocol that allows us to record any type of transactions transferring value. From tracking diamonds (Everledger is a great example of a firm that does this) or real estate properties, or even Delaware corporations or individuals’ identity, blockchain currently also provides a way of transi-tioning between the real and the digital world.

The biggest benefit of blockchain is that it enables multiple connected databases or data sources to communicate with each other with little need for human intervention nor a cen-tral authority overseeing this process. It allows multiple writers to agree on a chronological, transparent and auditable ‘history of truth’ that is encrypted and believed to be incorruptible.

However, despite the rapid uptake of the tech-nology, it presents many challenges to insurers – namely around speed, scalability, two-way trans-actions and data confidentiality, just to name a few. We have been discussing many of these challenges

with some of our clients, and the industry is acknowledging that understanding blockchain and its potential is only a first, small step of the journey. These discussions have now evolved to actually thinking of use cases and designing proofs of con-cept that can advance the use of blockchain among the insurance ecosystem. Large financial insti-tutions – both banks and insurers – have joined efforts in two main consortiums – R3CEV and B3i – to solve these problems. Cross-industry efforts with players from other industries are also starting to bear fruit. This new and dynamic ecosystem is seeing large sums of capital come in, and shifts in alliances are expected as the technology matures and players start picking potential winners.

As a result, blockchain enabled solutions will transform the future of the financial services industry as we know it. They will allow for more disintermediation, for self-executing products and back-end processes and most importantly, for higher cost-efficiency that will allow reaching new, underserved markets. They will facilitate the growth of newly emerged structures – like P2P lending or P2P insurance.

Overall, the combination of blockchains, smart-contracts, internet of things and con-nected devices providing oracles, big data analyt-ics and artificial intelligence has the potential to construct systems in which risks are measured, assessed, pooled and allocated to investors auto-matically, with full transparency and immutable records. While this is not going to happen over-night, it is certainly around the corner and has the potential to be highly disruptive.

Magdalena Ramada is a senior economist at Willis Towers Watson

Blockchain technology has evolved to become a protocol that allows the recording of any type of transactions transferring value. This has huge implications for the future of financial services

M A G D A L E N A R A M A D A : W I L L I S TO W E R S WAT S O N

The future of blockchain


I N T E R V I E W

When Vincent Bastid took the position as Efma’s CEO just over a year ago, he promised to transform the global not-

for-profit organisation for the better by improv-ing efficiency and collaboration and creating new services and high value digital platforms and content for its community of over 3,300 member banks and insurers.

Fast forward to today, and he has delivered on his promise and more. Within a few months he had found new state-of-the-art premises, replaced the 15-year-old IT system and restructured the organisation in order to achieve new efficiencies. “Our new premises provide a more appropriate environment in which to thrive,” he says. “We can invite our members here, who can hold their own meetings and co-creation events – something that we weren’t able to facilitate in the past.

“We’ve replaced our incumbent IT systems with new CRM and CMS systems (including next gen-eration event management and campaign market-ing automation software), shifting IT development from apps to APIs and participative digital plat-forms. We also work differently internally – we have created new HR and business management processes, formed teams based on expertise and initiated more virtual collaboration. As a result, we are realising 15% additional working productivity,” Bastid continues. “That extra efficiency has been used to launch and test new initiatives to deliver a new augmented value proposition to members and to set up a new foundation for growth, without claiming for external funding.”

Bastid has also instigated the launch of three new online portals: the Fintech Portal; the SME AppsBank Portal; and the Innovation in Insurance (I3) Portal. “The success of the I3 Portal has been unprecedented and has provided huge industry recognition to winners, as well as a great database for Efma members who can get inspired by hundreds of case studies and find the direct contacts they need,” he says. “It is still too early to assess the SME and Fintech Portals, but I’m confident that they will provide competitive advantage for our members.”

By evolving in this way, Bastid is confident that Efma is able to help its members meet the many challenges of operating in retail financial services. “Some bankers have lost the pride in what they do, and trust has decreased. We need to work together to rebuild this because a bank moving in a separate direction will not help set up the standards of banking for tomorrow. It’s a collaborative, industry-wide venture. That’s why

Since his appointment as Efma’s CEO in 2015, Vincent Bastid has initiated a huge amount of change. Here he explains how he is paving the way for a new financial services landscape via industry-wide collaboration

Instigating change in financial services

B Y L I N D S AY J A M E S

Efma has moved in to brand new premises

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our new mission is to reinvent financial services as an industry, to set up clear advanced standards for end customers – getting new thinking and inspiration from our large community of banks and insurers – and leveraging key learning and analytics from Efma portals and research.

Bastid says that Efma will achieve this via a shift in its offering. “We don’t want to be considered to be simply a content provider – we want to be a strategic transformation catalyser,” he says. “To this end, we’re now delivering a wide range of topic-centric digital content and services to our members. For example, an SME manager will have access to a SME digest which summarises all of the major research in the SME industry. They will also have access to a range of Efma co-branded reports on SME banking, as well as an Efma voice of mem-bers’ document which brings together thought leadership from the biggest names in the industry. They can attend three free SME co-working coun-cil sessions per year (an exclusive to members), attend visit the yearly SME conference where they can network with more than a hundred peers and also take advantage of the SME portal and have a chance to win an industry award that will provide tremendous publicity and business opportunities. We are also offering the same package for private banking, insurance, operational excellence, inno-vation, fintech, and other key topics that are front of mind for our members.”

The new approach is already paying off. A record number of banks and insurance compa-nies joined Efma in 2016 – including Standard Chartered Bank in the UK, Mizuho Financial Group in Japan, Raiffeizen Bank International in Austria, DBS in Singapore and many more.

Looking forward, Bastid says that over the next 12 months there will be even more value to be had from an Efma membership. “Co-creation will be the buzzword for the next year,” he says. “We’re about to launch our first co-creation event and we’re keen to organise more of these. We will also be co-creating the next versions of our portals.

“We’ll also be running new learning expedi-tions, as well as redesigned workshops, incuba-tion programmes and more,” he explains. “And I’m excited to announce our new ‘executive advi-sory programme’ catch up sessions which are aimed at bringing busy executives up to speed with where the trends are, what they need to do to transform and how they can do it. These will begin next year in the UK and Asia.”

Bastid is also looking forward to the evolu-tion of Efma’s portals and awards programmes. “These will become more community-based, and topic-centric,” he says. More interaction on the portals will result in more data. “In the past our research was done by interviewing members,” Vincent explains. “But by creating these large databases and industry portals we are able to analyse information and pinpoint more trends. This will be extremely valuable.”

“Overall, I truly believe that Efma has evolved from being a nice to have into something that is absolutely essential to get to industry sustainable models and new standards,” Bastid concludes. “This kind of community is invaluable to the suc-cess of the industry as a whole and our members will be the first ones to get high returns and see the value of this wide community collaboration on our future.”


“Our new mission is to reinvent financial services as an industry”

Microsoft Global ISV

Innovative software solutions backed by insurance industry insight

Our rich heritage in insurance risk, analytics and technology gives us a unique perspective. We o ffer more than individual products and services – we understand your business issues, allowing us to deliver software solutions so that you can unlock your full potential.

To find out more, please contact [email protected]

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Towers Watson is represented in the UK by Towers Watson Limited.

Latest thinking. Leading software. Unlocking potential.

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F I N A N C I A L S E R V I C E S V I E W P O I N T

Demanding digitalA N D Y L I L L E Y : B OT TO M L I N E T E C H N O LO G I E S

Digital transformation efforts must extend to payments and invoicing in order to achieve greater insight and more efficient business processes

For much of the last ten years, investment in financial technology has been focused on meeting a stream of financial regulations

and transactions inside the system of record. But a shift towards business efficiency and improved service levels is now taking place, especially with customer delight being at the forefront of growth.

Today’s companies are more aware then ever of how they want to consume their technol-ogy – whether that be through a cloud, hybrid or on-premise model. We hear the term ‘digital transformation’ used a lot, and a major part of this is the acceptance of cloud technology.

As part of this shift towards business efficiency, Bottomline Technologies has moved more than 5,500 customers to a cloud-based business solu-tion suite, PT-X, which includes payments and financial document automation functionality.

According to AIIM, removing paper from business processes can improve efficiency by up to 300%. Despite this, research by PayStream Advisors shows that around 70% of invoices are still received by organisations as paper or plain PDF documents. To truly make a digital trans-formation and capitalise on the opportunities it offers, automating and digitising processes is key.

There are several technologies that can help release financial resources for redeployment. AP Automation significantly reduces manual grudge work by automating the extraction and

validation of invoices. Additionally, payments technologies provide other obvious benefits, such as ‘know your customer’ checks which immediately validates and verifies customer and supplier data in a fraction of the time.

By automating compliance, exceptions and manual filing of documents and payments, tasks can be significantly reduced. Removing the lag in the end-to-end financial process and improv-ing visibility and control can free up resource and enable those higher value tasks.

I am a firm believer in the idea that standing still is the fastest way of going backwards. If, when invoicing or carrying out other financial tasks, you make it difficult for your customers to buy from you, they may not choose to do so again. Customers want these processes to be transpar-ent, collaborative and easy in this digital world.

From a document automation perspective, Bottomline’s PT-X payments and business solu-tion suite offers a service that gives clients an insight into how their customers are responding to invoices. They can monitor the patterns of indi-vidual customers and proactively identify where to invest their time and effort when looking to reduce aged debt. Enhanced visibility and control – which paper-based systems and processes and even emailing PDFs cannot fully deliver – means that you can identify where best to deploy resources. The result is tactical increases to operations and strategic improvement to business processes.

We are living in a digital world. It is not a question of should businesses embrace digital transformation, but rather how will they if they haven’t already?

Andy Lilley is regional director for financial document automation at Bottomline Technologies

“Removing paper from business processes can improve

efficiency by up to 300%”

BrovadaOne

Digital connectivity for the insurance world

BrovadaOne connects insurers, intermediaries and end-users in real-time through a single platform, improving workflow efficiency and accuracy. It saves time and resources by integrating existing legacy IT systems and streamlining access to wide sources of data so that you are able to deliver an agile go-to-market pricing strategy.

Combined with our leading pricing software Radar, BrovadaOne forms part of our vision to deliver an integrated insurance landscape where innovative technology and deep industry knowledge come together, so that you can realise operational efficiencies and make more informed decisions.

For more information please contact [email protected]

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V I E W P O I N T F I N A N C I A L S E R V I C E S

Digital transformation is front of mind for all insurers as they recognise the need to build more agile and relevant business

models for the future.But achieving this can be a daunting prospect

when organic expansion and acquisitions have left companies with their IT infrastructure rep-resenting something of a Frankenstein’s monster that promotes inefficiencies through a lack of connectivity, automation and insight.

The natural inclination, therefore, is for com-panies to think that they have to replace systems to compete in the digital world. But this is poten-tially cost-prohibitive and insurers don’t exactly

have a sparkling record in achieving the objec-tives of policy system replacement projects.

New options for retaining and optimising existing systems via an integration platform are emerging – a recent project undertaken for a large international insurer using our BrovadaOne product demonstrates this.

In this example, the company’s commercial underwriters were using hundreds of rating tools to quote policy prices. In addition to the obvious inefficiencies inherent in this approach,

a lack of transparency in the systems left under-writers unable to interrogate and flex how a price was generated. Moreover, it made it impossible to view multiple policies at a customer or portfo-lio level that could in turn support strategic deci-sions about risk acceptance and pricing. The goal was to address these issues while improving pric-ing sophistication and speed-to-market, and to introduce new technology and operating models into the existing IT and business ecosystem.

BrovadaOne was offered to create a modern front-end web interface to support more efficient underwriting, and to manage the data flows and rating integration necessary to provide accurate, real-time rating and reporting. Deployed in combination with Willis Towers Watson’s Radar Live pricing software, the solution leveraged the Microsoft Azure platform to provide flexibility and scale in a centrally managed environment.

The project eliminated some redundant under-writing tools and enabled our client to recharge existing systems into a more cohesive whole, moving the company towards a digital future without the culture shock and level of invest-ment involved in starting afresh.

With around half of insurers reportedly admit-ting to not having a comprehensive digital plan, those that can find similar ways to break through actual and perceived IT barriers put themselves at an advantage.

Charlie Samolczyk is global head of sales for BrovadaOne at Willis Towers Watson

“New options for retaining and optimising existing systems via an

integration platform are emerging”

C H A R L I E S A M O L C Z Y K : W I L L I S TO W E R S WAT S O N

Existing and often disparate policy systems don’t have to block insurers from achieving the goal of developing the connected, digital business models that will enable them to stay competitive and enhance customer experience

Awaken your IT monster


The time for IFRS 17 (previously known as IFRS 4 Phase II) is finally coming. The future accounting standard for insurance

contracts is presumed to be finalised in early 2017, with an expected effective date of 2021. The long timeframe allowed for the implementation is an indication of how complex the industry is expecting this project to be. From the perspec-tive of leading consultancy firms, IFRS 17 will emerge as one of the biggest operational chal-lenges insurers face to date.

The challenges are not merely accounting topics, but fundamentally related to data integration: the standard enforces traceability and reproducibility of all data and calculations to the very source. Currently, only a few companies have achieved this level of integration. In most cases, systems have grown in silos, data exchange is largely file based, and often human interaction is needed to adapt files in order to match the granularity and the data language required by group reporting. This process is error prone and will not fulfil the requirements of IFRS 17. Therefore, insurance companies will have to redesign processes and systems to adjust how data is being produced, collected, stored, distributed and analysed. The consistency and transparency of the data sub-mitted from the business units to support group reporting will require a substantial improvement.

Integrating historically grown data silos is a dif-ficult exercise. Many of these systems are not easy to maintain, and the data languages are different and hard to align. A common data language needs to be created in order to fulfil group reporting

requirements. However, the local systems will also have to comply with local regulatory and market standards. In our experience, out-of-the-box sys-tems do not have the flexibility to deal with these complex data landscapes, so a tailor-made solu-tion is required. Using a traditional development approach, tailor-made solutions become very expensive, both to develop and to maintain. But budgets are limited nowadays.

This is where a smart data platform (SDP) can support: all the technical concerns such as audit trails, data lineage, and proper versioning of data can be provided by a standard technology, whereas the content, such as the data model and business processes, can be highly customised to the internal existing systems. This enables companies to deal with their legacies gradually and benefit from a high level of integration through the SDP.

Special attention should be drawn to data ver-sioning, as most of the reference data evolves over time. For instance, organisational changes will require the reporting units and portfolios to be adapted not to violate referential integrity. This is a problem for all data systems, and only a few technologies can deal with such require-ments. The technology chosen should guarantee that all data states can be captured appropriately so that comparison among different years is efficiently handled. Version control for data pro-vided by the SDP can elegantly address this issue and satisfy requirements.

IFRS is not the only process to provide infor-mation on economic financial statements. Insurers will also have to produce other reports

Taking cost out of IFRS 17

IFRS 17 budgets do not have to be massive: insurers can take advantage of a smart data platform to ensure cost-efficient implementation

D A N I E L T R Z E S N I A K : S Y S T E M O R P H

V I E W P O I N T

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on a regular basis. As such, related IT systems will need to support multiple live data sets in parallel based on a consistent data language. The systems shall enable transparent reconciliation between these reports and ensure reproduc-ibility. Supporting such a complex process in an integrated environment is far from easy. It is therefore crucial that the SDP has appropriate versioning features to handle multiple live data sets working in parallel, like data branches.

Systemorph Vertex is an SDP technology, which tackles all the issues discussed above. Thanks to the rich set of features already included, it allows for an ultra-rapid development of custom content

able to efficiently address the cost and timeline issues associated with IFRS 17. The key require-ments of traceability and reproducibility are ful-filled by design. Moreover, to our knowledge it is the most complete version control system for structured data. With Systemorph Vertex, insur-ers can focus on the business content of IFRS 17, and not spend resources on the IT concerns of data integration. Choosing the right technology is key to the successful implementation of IFRS 17. And Systemorph Vertex is a leading solution.

Daniel Trzesniak is head of marketing at Systemorph

IFRS 17 at Zurich Insurance Group

We speak with Martin Buess, IFRS project lead for Global Life Actuarial at Zurich Insurance Group, to find out how his company is tackling the new standard

I N T E R V I E W

Can you describe the status of IFRS 17 at Zurich?Zurich first started preparing for IFRS 17 in March 2015 and began a group-wide project late in 2015. The main workstreams are organised around the technical and operational implications. The technical angle involves defining the methodologies based on the exposure draft of the International Accounting Standards Board (IASB) – mainly the present value of expected future cash flows, the risk adjustment and the contractual service margin. From an operational perspective, this is about implementing the IFRS methodologies into business processes, IT systems and valuation models.

What are the key challenges to comply with IFRS 17?As IFRS 17 is a complex and comprehensive topic it is key for us to first understand the standard and its operational adaptation. Because the standard is not yet final, there is also the uncertainty of final refinements that might impact the overall approach. It is then up to us to find the optimal path to implement the standard in a pragmatic, effective and cost-efficient manner.

What is required to successfully set up and execute an IFRS 17 project?IFRS 17 will change the accounting representation of insurance liabilities and the associated profit and loss dramatically. This will affect Accounting, Reporting, Performance Management and Actuarial divisions at all levels. These functions need to understand and adapt to the new standard and by doing so, they have to

strongly collaborate with each other. This is a mindset shift and needs a robust approach to facilitate working across functions boundaries at a global and local level. Also, internal IT needs to understand the business needs and provide reasonable proposals in cooperation with business. The final key to success is to identify the most pragmatic solution that allows for a lean and cost-efficient implementation.

What milestones are you working towards?Assuming the standard comes into force in 2021, we have defined the following key milestones:• Mid 2017 publication of methodology drafts for

implementation• End 2018 implementation completed• End 2019 dry runs with testing, fine tuning and

restatements• End 2020 prepare to go live and build prior year

comparatives and full IFRS 17 results• Beginning 2021 go live.

How will IFRS 17 impact the way insurance companies manage their internal data?IFRS 17 requires data consistency, auditability, traceability, versioning and the ability to reproduce data at any given point of time along the data flow through the whole organisation. We also assume that data granularity and the number of data sets will increase, which leads to higher volumes of data and the need for more computer power.

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